Tax cap case is finally in sight

Sunday

It is likely next year will see the state Supreme Court decide the future of tax caps in New Hampshire's cities and towns.

The justices have some interesting law to examine. It is an issue that has been considered in several lower courts, and it is time for a decision that clearly defines the law.

The high court will hear arguments that the tax cap approved by Manchester voters last month is unconstitutional.

There are tax caps in effect in several New Hampshire communities — more than half of them in the Lakes Region and southeastern part of the state.

Rising property taxes are driving the cry for tighter fiscal standards and the cry is spreading.

The cap approved by Manchester voters is supposed to take effect in July 2010. A Supreme Court ruling is anticipated before that date. A Superior Court judge nailed a Concord tax cap earlier this year, saying it ran afoul of state law and the state constitution. In Somersworth, the City Council blocked a tax cap referendum on the advice of special counsel.

The cost of city government and local school districts is rising. High unemployment and frozen wages and salaries, most common in the private sectors, have stretched the budgets of taxpayers to levels that cannot be sustained, never mind increased beyond the levels of inflation.

Put a tax cap proposal on the ballot and it is likely to pass by a substantial margin in most communities — and just as likely not be rescinded anytime soon.

Franklin was the first city in the state to adopt a tax cap. Laconia came later, with Dover and Rochester following. Had the Somersworth amendment made it to the November ballot, it, too likely would have been endorsed by the voters. A limit on taxation is not a hard sell.

It's not until services begin to be affected that the murmur of questions will begin to be heard.

Manchester is the case that's in play, but the observations and language of a Superior Court judge in Merrimack County earlier this year are likely to resonate among opponents of tax caps.

Judge Diane Nicolosi wrote in a Concord tax cap case that the proposed charter amendment violated a state law that spells out how cities must conduct their budget approval process. She wrote the proposed charter amendment "would interfere with the city manager's duty," as directed in the statute, to "present to the city council an original budget that is based upon the financial needs of city departments."

Nicolosi went on to write, "Although the proposed amendment does not preclude the city manager from submitting a budget based on the responsibilities of the city, it essentially makes this step futile because the proposed amendment would place restraints upon any budget that could be approved by the city council without a two-thirds override vote," the judge ruled.

Citing state law and a previous Supreme Court ruling, Nicolosi wrote, "the court finds that the voters are not entitled to the type of input into the creation of the original budget that the proposed amendment would provide."

The state constitution only allows municipalities "to adopt or amend their charters or forms of government in any way which is not in conflict with general law," she wrote.

She found since the amendment conflicted with the law, it was not only illegal, but also unconstitutional.

Tax cap advocates are caught in the web of New Hampshire not being a "home rule" state. Several years ago, a constitutional amendment to make it so failed to secure ratification. As a result, the cities, towns and counties of New Hampshire remain subdivisions of the state, subject to its general laws.

Of course, the Legislature might change the law if it sees fit to embrace tax caps — something as likely as its willingness to make substantial and real reductions in state spending.

A need for the New Hampshire Supreme Court to address the issue of tax cap constitutionality was inevitable. Hearings should be scheduled for no later than winter's end, with a decision forthcoming by the middle of June.

Clarify the law as it applies to all communities and subdivisions that are or might be affected.

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